A Note of Pessimissim from the Car Industry

Car company stocks are down around the world, for the most part, while sales have been mostly up this year. No one has adequately explained the divergence.

The head of Audi, Rupert Stadler, told Reuters that he expects the luxury car market to grow faster than the total one. He could be expected to say that because of the high-end position of Audi’s brand.

Stadler pointed out the typical challenge for economic trouble in the EU and perhaps the U.S. He does expect China’s car sales to move higher by 8% to 9% a year for the next decade. He may be wrong about that. Car and light vehicle sales have flattened as the People’s Republic has lifted car buyer tax incentives. China may be the largest car market in the world, but may no longer be a fast-growing one.

The growth of the entire auto manufacturing sector may still be thrown into reverse if there is a great recession in Europe. The U.S. will not be able to entirely dodge the fallout, and many economist believe that the American economy will be pulled down next year by the dual weights of jobs and housing.

Observers may look on 2011 as one the best years for the car industry since the golden ones before the recession.

Douglas A. McIntyre